Managing financial data.

This article outlines the financial skills that nurses must cultivate to be successful managers. It describes the basic tenets of accrual accounting, provides an overview of the financial reports that nurse managers receive regularly, and discusses the content of such reports and how to use the information provided. Also discussed are the need for budgets, the types of budgets nurse managers may be required to generate, and suggested areas where nurses can act as agents of change within their institutions.

The impact of IRS-mandated employee reclassification.

The IRS requires healthcare organizations to properly classify their workers as either independent contractors or organizational employees. In order to protect their organizations from IRS-imposed monetary fines, healthcare financial managers must understand how the IRS evaluates employment status and the consequences their organizations will face if they misclassify employees. Changes involving the status of independent contractors and organizational employees instituted by the Small Business Job Protection Act of 1996 are favorable to employers and clarify safehaven provisions under section 530 of the 1978 Revenue Act. Significant changes include requiring the IRS to notify employers of section 530's relief provisions when an audit begins, expanding section 530 relief, clarifying industry practice relief provisions, and shifting the burden of proof to the IRS. In addition to Federal legislation, the IRS introduced administrative initiatives, such as those contained in Announcement 96-13, to clarify worker reclassification issues. In Announcement 96-13, the IRS implemented a three-part plan that includes a test classification settlement program, an appeals process, and a training manual to clarify these issues.

Reporting community benefits.

Healthcare organizations increasingly are coming under community and legislative pressure to define and quantify their charity care and community benefits. The results of a survey suggest that healthcare providers are engaged in some of these activities, but that more healthcare organizations need to implement them. Some of the strategies providers can employ are adopting and communicating mission statements, setting goals for the amount and types of charity care and community benefits to be provided, gathering data to support the achievement of those goals, and forming or joining community health boards.

How nurses can make informatics work for them.

Nursing is one of the oldest clinical professions; however, it is not enough for today's nurses to be skilled in caring for the sick. They must also become efficient managers of their institution's resources. Emerging and ever-changing computer technology offers many tools that can help nurse managers plan, control, and evaluate the areas they control. This article discusses some the tools that nurses can use to make their jobs both easier and more effective.

Cost-accounting techniques for health care providers.

The author reviews cost-accounting techniques and systems used by manufacturing companies. Some of the concepts and techniques used by for-profit companies can be implemented for health care institutions. Nurse executives can learn many lessons in product cost accounting from these for-profit companies. Understanding the various cost-accounting methodologies and techniques that are available can help nurse executives design, implement, and use a cost accounting system that will identify the costs associated with products and services provided. The author also reviews and explains standard costing systems. These systems can serve as valuable tools for budgeting, evaluating, and controlling departmental costs. When used in these instances, they can prove useful, and they furnish important information that is necessary for pricing products, determining alternatives or substitute services, and controlling costs.

Telecommuting and health care: a potential for cost reductions and productivity gains.

Health care administrators are striving to maintain positive operating margins while remaining responsive to community needs. As they look for ways to reduce costs and improve productivity, they may consider the benefits associated with telecommuting. Telecommuting refers to the work performed by organizational employees who use computers and telecommunication equipment to work at home or at remote sites one or more days a week. Benefits to the health care industry include release of valuable hospital space, reduced employee turnover, and increased productivity. The time away from the institution may provide administrators with valuable planning time, free from interruptions.

Independent contractor arrangements and IRS audits.

As government auditors begin their challenges, nurse executives need to review their operations to remove any potential audit risks. Although a common practice for many institutions, the use of independent contractor arrangements may be ruled inappropriate. As a result, many individuals may be reclassified as employees, leading to Internal Revenue Service (IRS) assessments of penalties and back payroll taxes. It always is prudent to anticipate IRS actions and shore up any areas that may lead to tax assessments before they are imposed on the institution.

Decision support systems. Using computers to help manage.

Nurse executives often are encouraged to work smarter, not harder. Decision support systems offer methods for refining the decision-making process. The authors review the types of decisions that managers make and the ways that decision support systems can help nurse executives work smarter.

Applying just-in-time philosophy to healthcare.

Nurse executives need to review what is working in other industries to see if similar techniques and philosophies can help the healthcare industry. The authors review the manufacturing philosophy supporting the just-in-time method and apply some of its principles to healthcare to improve operations and operating margins.

Legislation threatens tax exemptions.

The Health Security Act, if passed by Congress, becomes effective January 1, 1995. To maintain their tax-exempt status, hospitals must assess the healthcare needs of their community and create a plan to meet those needs. The authors discuss proactive strategies for addressing this issue.

Valuing the community benefits provided by nonprofit hospitals.

Nurse executives need to be aware of the changing legislative climate in which nonprofit hospitals operate. Adopting an aggressive stance to protect an institution's tax-exempt status has become increasingly important. One way to provide protection from governmental challenges is to demonstrate the extent of charitable benefits provided by the hospital. The authors identify areas that hospital personnel should analyze to determine the nature and value of these benefits. Nurse executives are a valuable resource for identifying and communicating this information. They can also exert influence on their respective administrations to reassert the charitable nature of their mission.

The advantages and risks of being a tax-exempt, nonprofit organization.

Most nonprofit hospitals enjoy exemptions from income, property, sales, and other taxes. The advantages of the tax exemption generally outweigh any disadvantages. Recent legislative and judicial challenges, however, have reduced the tax benefits of nonprofit hospitals. The authors review tax exemptions as they relate to hospitals, identify the primary advantages and risks, and highlight areas where nurse executives can further the exempt purpose of their institutions.

Changes in accounting for contributions.

A proposed accounting change in the timing of income recognition for restricted contributions and pledges can greatly impact a hospital's excess of revenue over expenses (net income). The author addresses steps that administrators can take to lessen its impact. With this knowledge, nurse administrators and other hospital executives can plan alternatives to reduce the income recognition and prepare themselves to answer questions posed by patients and members of the community regarding increased hospital profits.

Financial techniques for evaluating equipment acquisitions.

The author explains various financial techniques that can be used to evaluate equipment acquisitions. She also introduces the concept of the time value of money and explains how incorporating this concept into the analysis can provide nurse executives with a better perspective of the factors involved in committing organizational funds to long-term capital purchases.

Cost categories, behavior patterns, and break-even analysis.

Nurse executives budget and control costs, use those budgets and other management tools to control departmental costs, identify existing programs to drop or change, target new programs and services, and determine fees for nursing services. Knowledge of costs and their behavior patterns assist nurse executives in all of these activities. The author identifies the two cost categories (direct and indirect), explains the basic cost behavior patterns (fixed and variable), and helps nurse executives identify these cost categories and behavior patterns in their own departments.

Understanding the tools for managing cash.

An institution's survival in the 1990s depends on its ability to generate enough cash to meet its needs. The author discusses two accounting tools, the cash budget and the statement of cash flows, that help monitor and control cash flows. By understanding the nature and impact of each report, nurse administrators can help safeguard one of their institution's scarcest resources: cash.